Spanish Property Yields More Than Five Per Cent Claims Agency

Investors can now get gross yields of five per cent or more from Spanish property, claims one of the biggest chains of estate agents in Spain.

A long crisis that has driven down house prices and turned off the mortgage taps lies behind rising returns for rental investments offering yields of between five and seven per cent, claims Jesús Duque, Vice-President of Alfa Inmobiliaria, one of the largest franchise chains of agents in Spain. Spanish property is now a “safe haven for savers and retirees again,” he told the Spanish daily El Pais.

Buy-to-let investments are particularly attractive in comparison to the paltry yields on offer from savings accounts and other run-of-the-mill financial products available to ordinary private investors, argues Duque.

Buy-to-let is becoming more attractive as Spanish house prices continue to fall, with resale asking prices down again in January, by 5 per cent annualised, according to the latest asking price index from Idealista.com, a property portal. On the other hand, prices already appear to have turned the corner in five regions, namely Murcia, the Valencian Community, Catalonia, Madrid, and the Balearics.

Bullseye Investing

Some areas are better than other for buy-to-let investments, in particular city centres, argues Duque, who recommends middle class areas in cities for the best risk-return stability in the long term, whilst dismissing holiday buy-to-lets as the least attractive due to low occupancy rates and high wear and tear.

“It’s much more profitable to invest in an area of any city than in a beach property where rental opportunities are generally limited to the summer months,” Duque says. “Whenever possible, if you’re looking for stability in your investment you should try to get long-term rentals.”

A family home, or one big enough for at least two adults, is better than a studio-apartment for one person with one salary, he advises.

Bear in mind that gross rental incomes have to cover local rates, community fees, insurance, maintenance, and income taxes before landlords can count their profits.